Category: global financial crisis

John Key is being a Spurious George again. In explaining why he’d love to cut taxes for (mostly) the rich, but just can’t afford to yet…

Key pointedly said that when National took office the average wage was $47,000 a year but had risen to around $55,000 today, and was expected to climb to $62,000 by 2017. This was creeping towards the top tax bracket, where salary earners pay 33c in the dollar for earnings over $70,000.

“I don’t think it was anyone’s intention that someone on the average wage would be paying the highest marginal tax rate in New Zealand,” he said, echoing arguments National has been making in private for months.

Well, Mr. Key, it also wasn’t anyone’s intention for the incomes of the rich to rise so much faster than those of the poor, pushing up the average (mean) income to a level less than 30% of people reach. (Actually it was some people’s intention: right-wingers who think inequality is a good thing)

Key is trying to give the impression that the average (mean) income is the income earned by the person in the middle. But mean doesn’t measure the middle of the people, but the middle of the money; and of course the money is weighted towards wealthy outliers at Mr. Key’s end of the spectrum, who push the average up with their exponentially higher incomes.

A far more useful statistic is the median income: the amount that half the people earn more than, and the other half earn less than. This truly represents the average Kiwi. The median individual income is almost exactly $30,000 p.a. – just under the middle of the third-to-top tax rate band.

It’s actually getting more and more misleading to portray average income as a reflection of middle-income earners: As inequality worsens, the “middle of the money” (average income) is moving further and further from the “middle of the people” (median income). My eye makes it less than 10% difference in 1980, up to about 25% now:

Another problem with mean income figures is they hide inequalities like these and portray a boon for the rich as a boon for everyone.

I do agree in principle with indexing tax-rate thresholds (in fact, all thresholds… *cough*student loan repayments*cough*) for inflation, but Key’s trying to use that principle as a smokescreen for more tax cuts to the rich, spinning this as a release for the average NZer from crippling over-taxation, which is not true on any level whatsoever. Taxpayers between the median and mean incomes actually pay the lowest proportional tax:

In any case, if Key is really worried about too many NZers in the top tax bracket, there’s an obvious solution: Implement a new top tax rate(s) for the super-rich, like most similar countries have:

Soooooooooo: whatever people’s intention about who should be on the top tax rate, it’s clear John Key’s intention in referring to the mean income, rather than the median, is to mislead (or perhaps he simplify misunderstood statistics in a conveniently misleading way, as with child poverty at the last debate). Sadly he’ll probably largely achieve that intention.

NZ’s political parties at the 2011 election now updated for the 2014 election, according to PoliticalCompass.org

“It’s actually a very clear decision for New Zealanders. It’s sort of centre-right versus the far left.” – John Key today

Coming from the most right-wing prime minister in NZ’s history, this is the height of dishonesty and hypocrisy.

At most, Cunliffe et al will take NZ as far left as the Kirk government (1972-1975), which was the last government that didn’t make a total mockery of our claims to be an egalitarian country.

More likely, the next Labour government will be centrist or centre-left… still considerably to the right of traditional Labour values yet hopefully a genuine alternative to the neo-liberal inequality consensus of the last four Labour/National governments. Cunliffe has gone on record acknowledging that this neo-liberal inequality experiment has failed our economies and our people.

Key, with his loyal servants in the corporate media, will attempt to claim the ‘centrist high ground’ and whip up McCarthy-esque hysteria about Cunliffe. For the second time in Cut Your Hair history, I’m advising: set your bullshit detectors to maximum.

After an eleventh-hour resurrection of Cut Your Hair just before the 2017 NZ election, the blog has re-overtaken its old rivals Put ’em all on an island, Keeping Stock and, the ultimate nemesis, Room 5 @ Melville Intermediate School.

(However, these rankings should be taken with a large grain of salt because not every blog is included, the stats are very fakeable, and each counter gives different stats, as you’ll see below)